Brief Introduction: Skil Corporation is a portable power tools manufacturer that was acquired by Emerson Electric Company in 1979. When Skil was first acquired, it had mediocre financial performance. Its main competitors in the portable power tool industry were Black & Decker, Sears, and some Japanese manufacturers. In 1979, the electric power tools were making up the majority of the portable power tool industry. 1. What is the analysis of the structure of the portable electric power tool industry? Is it structurally attractive?

This is primarily because of High rivalry between competitors. Despite of the low threats from other factors impacting industry structure, the industry is currently witnessing heavy rivalry because of slow industry growth and high number of existing competitors.

2. How is the industry structure changing? For the better or the worst?

Changes in Industry structure in 1979

Some changes are as follow:

The Rivalry between competitors was gradually focusing on price because of continually reducing product differentiation. Companies like Makita are leading the pricing based rivalry to gain a quick market share (sometimes 20% to 30% below market price). This might impact the already low industry profitability badly if other companies follow suit and start pricing aggressively. Companies are investing heavily on automation to increase production efficiencies and volumes. Black & Decker is investing heavily on automation and computerization of processes. This would help them in reducing the cost of production and at the same time increase the quality of their products. At the same time they would aggressively target bigger market shares to break even on their investments. (Because they need large sales) A lot of integration was happening in the industry. Joint Ventures, Mergers and acquisitions were then popular words. As Emerson Electric Company acquiring Skil Corporation, Amstar acquiring Milwaukee and Robert Bosch acquiring Stanley. This is good for industry profitability as this would reduce competition and increase profiting production. Home centers were emerging as an important distribution channel clearly indicating the growth of the domestic/do-it-yourself consumer segment. The changes in industry structure in late 70s were indication of profitable and attractive future of portable electric power tool industry.

3. What is Skil competitive strategy? What is its relative position?

* Low cost strategy
* Broad differentiation strategy
* Change in product improvementUse of battery power-- In 1960s cordless drill having nickel cadmium batteries were used but did not become commercially successful in early 1970s- Due to improvement in battery technology the sales of cordless tools growing rapidly in late 1970s

* Availability of lighter material such as Mg, aluminum, plastic * Decreased number of distribution channels
* Moved from stuck in the middle to FOCUS COST
* reduced product line
* redesigned/product families: STANDARDIZATION
* Decreased no. of plants; increased volume per plant More vol. Per model, more automation, vertical integration * Made automation flexible, more models/production line

...Question 1: What is your analysis of the structure of the portable electric tool industry? Has it been structurally attractive?
Degree of Competitive forces in the Portable Electric Power Tool industry
(Structural Analysis)
Barriers to Entry: High
The major barriers to entry in this industry were found in terms of
1. Technology,
2. Capital investment,
3. Economy of scale in manufacturing, and
4. Brand reputation in specific market segments & product categories.
Barriers to Entry (Technology/Capital Investment): Per the data given in the case study (Pg 3, Para 3), typically it required 2-4 years for a team of 4-6 engineers to develop a new tool. This also needed approx. $200,000-$700,000 per year investment in R&D and $250,000-$700,000 in tooling. Therefore it can be concluded that having the right technology and resources was a huge entry barrier for new organizations.
Barriers to Entry (Economy of Scale in manufacturing): All of the major cost components in manufacturing have significant economy of scale. The cost of molding, machining and die casting depended on the volume per part; cost of motor and final assembly depended on the volume per product family [Ref Pg. 6, Para 9].
However, it is interesting to note that, no manufacturer had the technology and scale to produce all the necessary components. Even in case of typical large manufacturers, only the critical...

...of the Five Forces model that shapes the competition in the industry. Each force is interrelated and therefore leads into the other to show the elements directly involved in the further success or ultimate success of the firm.
Starbucks Coffee Co. throughout its existence since 1971, with its great management team, innovative style of thinking and strong will to succeed in compliance with its mission and vision statements has and continues to overcome its barriers by recognizing such strategic planning as those included in Porter's five forces model. The model includes such components as Barriers to Entry, Supplier and Buyer Power, Threat of Substitutions, and most importantly the Industry Competitors. Starbucks throughout its existence has addressed each and every one of Porters forces with a positive edge that has greatly contributed to the success of the company. Starbucks took many risks and spent capital that it really did not have. To build a corporation based on intuition and a trip to Italy has undoubtedly paid off in the long run which is evident throughout the year that Starbucks has been in operation. Howard Schultz, CEO and founder of the company, has stuck to his conviction not to "sacrifice long-term integrity and values for short-term profit." He knew if he played his cards right and stuck to his guns it would only be a matter of time that Starbucks would become the world largest coffee...

...Industry Competition Analysis Midterm Exam
1. What is Industry Life Cycle Theory?
Please use global mobile phone (cell phone) manufacturing industry as an example to explain this theory. (50%)
Industry Lifecycle Theory describes the different phases of growth and decline that an industry moves through. In most examples of industry lifecycles there are either 4 or 5 phases as shown below:
| |
Typical 4 Phase Cycle | Typical 5 Phase Cycle |
The key difference is often how the early or embryonic phases are broken down. Using the global mobile phone manufacturing industry as an example the process would best break down into 5 phases as set out below:
* Embryonic (Product Development)
At this point (1960’s through early 1970’s) the product has no supporting industry. It is so revolutionary that the technology is for essential uses only, medical, research, finance, and military etc. For example when mobile telephones were first introduced; they were heavy, bulky and even required a suitcase for the battery. The technology is (by today’s standards) very primitive.
* Introduction
Introduction is the very earliest stages of a product being released to the general market. The unique product has been developed and patented, thus beginning a new industry (perhaps the reason why some industry...

...BUSINESS MANAGEMENT
SKILCORPORATION CASE ANALYSIS
STRATEGIC MANAGEMENT
SECTION: C
ASSIGNMENT #: 3
INSTRUCTOR: ABDUL QADIR MOLVI
DATE: 12TH MARCH, 2013
Q1. What is your analysis of structure of possible Electric Power Tool Industry?
According to the Porter’s Five Forces Analysis the industry is moderately attractive.
Q2. How the industry structure is changing? Are these changes for better or worse?
The power tool industry consisted of portable and stationary tools with wide range of sizes prices and qualities. The industry was becoming increasingly segmented by price point, with each point representing a certain level of quality. The power tools were broadly divided into two categories; professional/industrial and consumer. The professional tools were superior in quality and therefore were sold at higher prices and greater gross margins than the consumer tools. However, as the consumer tools were becoming more sophisticated and of better quality the distinction between both the categories started to blur.
As technology was improving the trends of usage of power tools changed (corded tools were replaced by cordless ones). The other improvement was the availability of lighter materials (aluminum, magnesium and plastic). This helped in lowering the costs of production. Also, energy efficient tools were...

...acquired SkilCorporation, a financially mediocre performing company for $58 million.
Skil was a leading manufacturer of portable power tools serving the professional and consumer markets, the circular saw being the strongest and best seller amongst those tools, which it also invented, and was amongst the top three in power tools market share holdings in U.S. Other power tools that Skil manufactured included mid-priced drills and roto hammers. Skil manufactured multiple different models for different countries, depending upon the local needs of the market. Under increasing competitive pressure, Skil’s financial results had not been stellar, although reported profitability had improved in recent years. It sold through all distribution channels but was well established in hardware stores and had a strong position in circular saws in contractor supply channels. Its sales force serviced all distributors except the mass merchandisers. Skil seldom advertised and relied more on product publicity. It sold tools on a worldwide basis, with its greatest international strength in Europe.
Emerson has a task at hand to improve the market share of SkilCorporation given that the industry is saturated and has competitors like Black and Decker and Sears. We analyze this case by first looking into the portable tools industry and Skil’s competitive...

...IndustryAnalysis
The course is based on the ability of students to define their business, conduct an effective industryanalysis, and identify the "key success factory" for firms competing in the industry. Such industryanalysis is based on:
A. DEFINE THE BUSINESS. The boundary for industryanalysis is the markets and products that describe the domain of theindustry. Once you understand the business segment that is to be analyzed, identify the capabilities required to participate in that industry, and those competitors that are able to effectively target the same business segments. These four elements set the parameters for understanding and analyzing the industry. As industries like printers, copiers, scanners, and facsimile machines converge, business definitions become more difficult. In industries like computers, consumers are becoming more demanding for customized products and services.
B. DESCRIBE THE INDUSTRY STRUCTURE. For each product-market segment, an industryanalysis will describe the "five-forces" of competition.
1. A primary force comes customer segments that make up the markets. The size and importance of customers provide the power to negotiate prices and deals that reduce the profitability of the...